5 Investments in Singapore that caters to every investor’s risk profile
In terms of investments, Singapore is a ripe nation with plenty of Singaporeans earning or losing a fortune through investments. Every other working professional or self-employed individual in Singapore is either an investor or is planning to start investing. As per an article in the balance, by 2025, CLSA forecasts that the country will overtake Switzerland and handle nearly a third of the world’s agri-commodity trade.
There are many reasons why investment in Singapore for beginners is a great idea. Singapore has a robust economy, a highly educated workforce, excellent connectivity, and high standard of living to contribute to Singapore’s financial success. Owing to these factors, it comes as no surprise that Singaporeans actively engage in making investments. Some of the most common investment options that cater to every Singaporean’s risk profile are listed below.
Singapore Saving Bonds (SSB)
This is a special type of savings bond, which falls under the Singapore Government Securities. These are suitable for investment in Singapore for beginners as they are relatively risk-free. It is, therefore, one of the most common investment options in every investor’s risk profile. The best part about SSB is that there is no penalty for early redemption of the bonds. All you need to do is give one month’s notice before you redeem your bonds.
SSB also complements other savings and investments as a safe way to save for the long-term. If you want to extract good returns through SSB, then you have to invest for at least ten years. The rate of interest will keep increasing with every passing year and so will your principal amount.
CPF Special Account
The Central Provident Fund Account (CPF) is majorly a retirement planning option. It is yet another investment option that a lot of Singaporeans include in their financial profile. The CPF account is an excellent option for those who want high returns but are not willing to take any risk. But they do not mind not having access to their funds until their retirement.
CPF is a risk-free investment with an annual interest rate of 4 percent. It is, therefore, one of the easiest ways to build your retirement funds without any risk. As per an article in Dollar and Sense, for every $10,000 you top up in your CPFSA at the age of 30, you will be able to receive back $26,658 at age 55. The consideration here is that unlike the SSB, you cannot withdraw the money in your CPFSA until the age of 55, with the exception of making CPF approved investments.
The Real Estate Investment Trust (REITs) is another lucrative investment option in Singapore. This form of investment is ideal for those who wish to earn passive income by investing in properties. An Investor can select different types of REITs such as industrial, commercial and healthcare REITs.
Singapore Real Estate Investment Trusts have listed companies that pool investors’ capital to invest, own and operate real estate properties.
The properties are then leased out to tenants. Investors who invest in REITs are co-owners of the REITs. They are entitled to earn rental income from the property assets that are distributed regularly.
Almost all financial market aficionados include stocks in their risk profile. Although it is not recommended for investment in Singapore for beginners, people with considerable experience in investing should start stock trading.
There are both pros and cons to investing in stocks. On the positive side, it can provide you with high returns. It provides flexibility for investors to create their portfolio. And you can sell shares at any point in time as long as there is volume. This makes it a highly liquid investment option. You can opt for a combination of growth funds as well as index funds depending on your age and risk tolerance. The downsides of stock investing include its high volatility, which makes it a high-risk investment. And as an investor, you will have to put in a lot of effort to research the stocks you will be trading in.
Cryptocurrencies like bitcoins and ethereum are relatively newer investment options. Singaporeans are still warming up to the idea of investing in digital currencies. Lately, bitcoins have been in the news with multiple investment gurus either speaking for or against it as a potential investment option. The curiosity and speculation around cryptocurrencies never seem to end. But it is still a popular investment option in Singapore at the moment. It is a decentralized form of digital currency and has a centralized open ledger, makes it an ideal option for investments. All you have to set up an account in a popular bitcoin exchange like Coinbase or Coinhako.
These were some of the most common investment options Singaporeans opt for in their financial profile. Have you invested in any other financial option other than the ones mentioned above?
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